Do Kwon’s Terraform Labs, the company behind the now-defunct TerraUSD (UST) stablecoin, has filed for bankruptcy protection in the United States.
The firm filed for Chapter 11 bankruptcy protection at the United States Bankruptcy Court for the District of Delaware, citing between $100 and $500 million in estimated liabilities and assets, according to a Jan. 21 filing.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” said Chris Amani, CEO of Terraform Labs in a separate statement.
“We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings.”
According to the court filing, the defunct firm has between $100 and $500 million in estimated liabilities and the same amount in estimated assets.
The bankruptcy filing comes just four days after the U.S. Securities and Exchange Commission (SEC) agreed to postpone Kwon’s upcoming fraud trial to March 25 after receiving a request from his legal team to delay the proceedings.
Kwon’s Terra ecosystem collapsed in May 2022. Shortly after the firm imploded, the whereabouts of its co-founder remained unknown until he was arrested in Montenegro in March 2023 after attempting to use falsified travel documents to leave the country.
The SEC first filed civil charges against Terraform Labs and Kwon in February 2023. Both parties were alleged to have orchestrated a “multi-billion dollar crypto asset securities fraud” related to the tokens formerly known as UST and Terra (LUNA).
Both the U.S. and South Korea are seeking Kwon’s extradition. There has been growing speculation that Kwon could be subjected to multiple sentences in both countries.
If Kwon is extradited to South Korea, he could face a 40-year jail sentence in the country where he is alleged to have committed the majority of his crimes.